Telcos, MSOs, 'Hosters' to Get Half of U.S. SMB Cloud Spend

AMI Partners: Hosting companies -- pure-plays, telcos and MSOs -- will take 46 percent  of U.S. SMB investments in cloud services.

Channel Partners

June 28, 2012

2 Min Read
Telcos, MSOs, 'Hosters' to Get Half of U.S. SMB Cloud Spend

In the fast-growing U.S. cloud services market, hosting companies — pure-plays, telcos and MSOs — are expected to be the top source for small and medium businesses with fewer than 1,000 employees, according to AMI Partners.

The research firm said hosting companies will take nearly half (46 percent)  of U.S. SMB investments in cloud services, which are expected to reach $34 billion in 2012.

“A key reason that hosters are becoming a leading cloud channel for SMBs is because they have proven they can effectively handle critical infrastructure, while providing the necessary level of support,” said Monik Sheth, research analyst at AMI-Partners. “Poor service can be an immediate deal breaker for any company, and SMBs are no different.”

In fact, according to the AMI study, nearly a third of SMBs said they would quickly switch their cloud service provider if desired service levels are not met.

Hosting companies’ legacy of providing Web and mail solutions to SMBs has prepared them well for expanding their portfolios into other cloud-based services, AMI said.

AMI Partners is including telecommunications providers (telcos and cable companies) in the “hosters” category is because many of the solutions offerings are beginning to overlap, especially around IaaS and related cloud offerings, Sheth told Channel Partners. “Telecom firms are making strategic plays in the hosting space, as you can see for example by M&A activity among major telecoms in the U.S. (e.g.. Verizon acquiring Terremark and Time Warner Cable acquiring NaviSite),” he said.

AMI also noted that for more advanced cloud deployment and migration needs, hosting companies actively are courting downstream channel partners like MSPs and ISVs, who can provide additional value-added services to SMBs. By developing these relationships, and offering integrated solutions coupled with remote managed IT services, hosting companies are expected to play a leading role in enabling the growth of the SMB cloud market.

SMB cloud services spend includes investments in IaaS, SaaS, web hosting, UC and remotely managed IT services. Two areas where AMI Partners found  SMBs see clear benefits, and are aggressively moving to the cloud, are hosted infrastructure, such as servers and storage, and remote management of IT systems and related applications. That’s because SMBs have very limited, if any, internal staff dedicated to managing technology, so deploying these solutions in the cloud, with the support of a trusted provider, is quickly becoming the norm, the research firm explained.

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